The boss of Debenhams Group has said the turnaround of the fashion retailer is ahead of plan as the focus now switches to growth.
Debenhams Group is an online platform across five shopping destinations: Debenhams, Karen Millen, boohoo, MAN and PLT.
In an upbeat trading update this morning, the board announced its forecast delivery of £53m adjusted EBITDA in the financial year to February 28th, 2026 – described as being ‘comfortably ahead’ of the previously upgraded guidance in January.
This year-on-year 36 per cent increase in full year adjusted EBITDA is driven by a 76 per cent increase in H2 adjusted EBITDA.
Boohoo’s share price went up from 17.5p to 18.5p on early trading upon the news.
The board said it remains confident of double-digit adjusted EBITDA growth in the financial year ending February 28th, 2027.
Group CEO Dan Finley said: “Our multi-year turnaround strategy continues at pace. We are pleased with the 76 per cent increase in H2 adjusted EBITDA and £53m full year adjusted EBITDA.
“Our pivot to the stock-lite, capital-lite, highly profitable marketplace is working.
“The cost base has been reset, the warehouse consolidation completed, the tech re-platform delivered, the stock base rightsized, most of the onerous costs exited and the brand management teams strengthened.
“This is significant progress, ahead of our plan, but there is still more to be delivered and we now focus on growth.”
According to this morning’s trading update, the group’s cost out strategy delivered a fixed cost exit rate of £119m (£11m less than the £130m guided in February 2026), reduced from £175m for FY26, with the group remaining on track to meet its target of £100m in FY27.
Net debt had been reduced to £90m – helped significantly by a £40m fund raise in February, including £8m from co-founder Mahmud Kamani and his family.
Asset-lite model
The group said it is transitioning to an ‘asset-lite model’ through marketplace, which remains at the core of the turnaround plan, and enables it to capitalise on the increased momentum in the turnaround plan.
As stated in the previous guidance on February 17th, the board will increasingly focus on free cash flow as a financial metric as to the performance of the business which the board expects to materially improve in the coming year.
In FY26 cash lease costs were £18m which includes the costs of leased property that is now vacant.
The board now anticipates that lease costs in FY27 will reduce to c.£13m.
In addition, when the group’s vacant US property lease is exited, lease costs are estimated to fall further to c.£6m.
These remaining lease costs will predominantly relate to the group’s Manchester head office, the fully automated warehouse in Sheffield and a small London footprint.
The expected reductions in lease costs will have a positive impact on cash flow.
Similarly, the group’s capex fell in the year from £28m to c.£16m. In the FY 2027 capex is expected to fall to c.£8m in FY27, further enhancing cash generation.
Interest costs in the year to February 2026 was £21m and is expected in the year ahead to fall as non core property assets are disposed as the business deleverages resulting in lower debt year on year.
Working capital in the year to FY26 is expected to be marginally cash flow positive and the Board is anticipating further reductions as the growth of marketplace continues.
Depreciation in FY27 is expected to fall from c. £59m in the year to February 2026 to c.£20m reflecting the lower asset base post write offs relating to the transformation.